Priest arrested in Vatican bank probe

Priest arrested in Vatican bank probe

A senior Catholic cleric has been arrested on suspicion of fraud and corruption in connection with a sweeping probe of the scandal-plagued Vatican bank, Italian media reported Friday.

Contrary to earlier media reports, the arrested cleric Nunzio Scarano is not a bishop but a priest from Salerno in southern Italy who is called "monsignor" in recognition of his seniority at the Holy See, Vatican senior media advisor Greg Burke said.

Scarano was arrested after an investigation into the Institute for Works of Religion (IOR), as the bank is known, unearthed a suspected international fraud scheme, reports said.

The senior cleric was suspended from his position as a member of the administration that manages the Vatican's assets (the APSA) "about a month ago, after his superiors learnt about an investigation into his activities," Vatican spokesman Federico Lombardi said.

Scarano was arrested along with a former member of the Italian secret services and a financier, reports said.

Police declined to confirm the arrests, saying a press conference would be held later on Friday.

ANSA news agency said the three arrested men were suspected of plotting to illegally move 20 million euros ($26 million) from Switzerland to Italy.

The money allegedly belonged to friends of Scarano and was brought into Italy on board a private jet belonging to Italian former secret service agent Giovanni Maria Zito, the reports said.

Zito purportedly received 400,000 euros for the service.

According to the daily La Repubblica, Scarano is also under investigation by the Salerno prosecutor on suspicion of money laundering.

"They called him Monsignor 500... because of the great number of 500 euro notes he had at his disposition," which he allegedly used to launder money for friends in southern Italy, the daily said.

It added that it was an initial investigation into Scarano's bank account at the IOR which led to the discovery of the suspected racket.

Through the years the Vatican bank has been tarnished by scandals, with criminals using anonymity or false names to launder money.

The biggest scandal was in 1982 over the bankruptcy of Banco Ambrosia, in which the Vatican was the main shareholder and which had been accused of laundering money for the Sicilian mafia.

The chairman of Banco Ambrosiano, Roberto Calvi -- dubbed "God's Banker" in the press -- was found hanging from Blackfriars Bridge in London in 1982 in a suspected murder by mobsters.

The Vatican promised in 2011 to redouble its efforts to reform the bank and overhaul its financial legislation following reports of anonymous accounts at the bank being used by organised crime.

The bank was back in the headlines in 2012, when its head Ettore Gotti Tedeschi was sacked by the board after a major falling out with the Holy See's Secretary of State Tarcisio Bertone.

In a bid to tighten control of the bank's activities, Pope Francis announced on Wednesday a sweeping study of the bank before a possible clear-out of top management at the Holy See.

In his first real step towards reform, the pontiff is to take a hands-on approach, ensuring that everything a special five-member commission uncovers will be reported directly to him.

The pope, elected amid an in-house debate over whether it is necessary to have a Vatican bank at all, has railed against the cult of money, calling for a "poor Church".

He has also quipped that "St. Peter did not have a bank account", and warned the IOR and other Vatican staff that "offices are necessary but they are necessary only up to a certain point."

Earlier this month, Francis named cleric Battista Mario Salvatore Ricca to oversee the IOR's management -- effectively placing a trusted ally in a key position to report to him,

The IOR, which does not lend money, manages assets of 7.0 billion euros ($9.3 billion) and handles funds for Vatican departments, Catholic charities and congregations as well as priests and nuns living and working around the world.